Jul 262021
 

The Finance Bill 2008 amended section 199 of the Act and the purpose for which section 199 of the Act was amended was explained by the Memorandum explaining the provisions in the Finance Bill,2008 under the heading “Amendments to the provisions of Dematerialisation of TDS and TCS certificates “in the following words-

“The system of allowing credit to the assessee for TDS/TCS needs a certain degree of flexibility considering the ongoing technological and business process changes. Providing rigorous conditions regarding the method of giving credit for TDS/TCS in the Act makes the system difficult to restructure and implement according to the changing technological environment. Because of this, it is proposed to substitute section 199 and section 206C(4) so that the manner in which credit of TDS/TCS is to be given will be governed by Rules to be framed under section 199 and section 206C(4), i.e. the Board may make such rules as may be necessary for the purpose of giving credit in respect of TDS/TCS or tax paid by an employer on perquisite under section 192(1A).

These amendments will take effect from the 1st day of April 2008.”

 

This section after this amendment and as on date reads as under-

Section 199. CREDIT FOR TAX DEDUCTED (TDS).

(1)           Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of the property or of the unit-holder, or of the shareholder, as the case may be.

(2)           Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made.

(3)           The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given.

Rule 37BA, as on date, reads as under-  CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199

(1)    Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as the deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority.

(2)    (i) where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the relevant amount, as the case may be, shall be given to the other person and not to the deductee:

Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the other person’s name in the information relating to deduction of tax referred to in sub-rule (1).

(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given, and reasons for giving credit to such person

(iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.

(3)   (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.

(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.

(3A) Notwithstanding anything contained in sub-rule (1), sub-rule (2), or sub-rule (3), for the purposes of section 194N, credit for tax deducted at source shall be given to the person from whose account tax is deducted and paid to the Central Government account for the assessment year relevant to the previous year in which such tax deduction is made.

(4)    Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of-

(i)     the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority; and

(ii)    the information in the return of income in respect of the claim for the credit,

subject to verification in accordance with the risk management strategy formulated by the Board from time to time.

Jul 162021
 

Most of the new ITR forms changes are consequential to the amendments made by the Finance Act, 2020 to the Income-tax Act. We have scrutinized the new ITR Forms and have identified the key changes in new ITR forms viz-a-viz last year’s ITR Forms. These changes have been explained below.

  1. No option to carry forward TDS deducted under Section 194N [ITRs 2 to 7]

In case of tax deducted under Section 194N, credit for tax deducted shall be allowed in the assessment year relevant to the previous year in which such tax has been deducted. The corresponding amendment has been made in ITR-2 to ITR-7 to restrict the carry forward of TDS deducted under Section 194N.

  1. Consequential changes due to change in taxability of dividend Income [ITRs 1 to 7]

The Finance Act, 2020 reverts to taxation of dividends in the hands of the recipient shareholders instead of payment of dividend distribution tax (DDT) on the declaration, distribution, or payment of dividends by the domestic company. The new ITR forms notified for the Assessment Year 2021-22 have been amended to incorporate these changes.

2.1. Schedule OS (other sources)

Dividend income earned by a person is taxable as ‘income from other sources’ under section 56(2)(i). Up to the Assessment Year 2020-21, Schedule OS required disclosure of that dividend income only which is not exempt in hands of the taxpayer. In the new ITR forms, Schedule OS has been amended to include disclosure of all dividend income earned by the taxpayers.

(a) Deduction of expenses from dividend income
A new row has been inserted in Schedule OS to allow deduction of interest expenses. However, the deduction is available only if the dividend income is offered to tax in Schedule OS.
(b) Dividend income chargeable to tax at a special rate
The Finance Act, 2020, has abolished the DDT. Consequently, provisions of section 115BBDA are not applicable on dividends distributed, declared, or paid by companies on or after 01-04-2020. Thus, reference of section 115BBDA has been removed from Schedule OS in the new ITR forms
(c) Dividend Income of non-resident unitholders

A new row has been inserted under the column ‘any other income chargeable at special rate’ of Schedule OS to seek details of dividend income taxable in the hands of the unitholders of the Business trust.

2.2. Schedule SI (Special Income)

Schedule SI contains a list of incomes that are chargeable to tax at a special rate (long-term capital gains, winning from lotteries, games, etc.). Since Section 115BBDA has become redundant, corresponding changes have been made to Schedule SI.

2.3. Schedule EI (Exempt Income)

Now the entire dividend income is taxable in the hands of the shareholders, hence the reference of ‘Dividend income from the domestic company (amount not exceeding Rs. 10 lakh)’ has been removed from Schedule EI.

2.4. Schedule PTI (Pass-through Income)

‘Schedule PTI’ seeks details of Pass-through Income from business trust or investment fund as per Section 115UA and Section 115UB.

2.5. Schedule DDT removed from ITR-6

Schedule DDT seeks details of distributed profits of domestic companies and payment of DDT. Since the payment of DDT has been abolished on any distributed profit on or after April 1, 2020, Schedule DDT has been removed from the new ITR-6 Form.

  1. Effect of marginal relief to be highlighted in the ITR [ITR 2, 3, 5]

Marginal relief is allowed when taxable income is beyond the threshold limit after which surcharge is payable, but the net income over the threshold limit is less than the amount of surcharge.

Computation of marginal relief

Particulars Amount
♦ Tax on actual total income [A] xxx
♦ Tax on deemed total income [B] xxx
The difference in tax [C] xxx
♦ Actual total income [D] xxx
♦ Deemed total income [E] xxx
The difference in income [F] xxx
Marginal Relief (if C is more than F) xxx

Now, the ITR Forms for the Assessment year 2021-22 have been amended to specifically require the assessee to show the effect of marginal relief on the tax payable by disclosing “surcharge computed before marginal relief” and “surcharge computed after marginal relief” separately.

  1. Adjustment of unabsorbed depreciation if the assessee has opted for Section 115BAC or 115BAD [ITR 3 & 5]

The ITR forms notified for Assessment Year 2021-2022 has amended Schedule DPM (Depreciation on Plant and Machinery) to make such one-time adjustment to the WDV of the respective block of the asset. Further, Schedule UD [Unabsorbed Depreciation and allowance under Section 35(4)] has also been amended to make the corresponding adjustment to the unabsorbed depreciation for the amount of depreciation already adjusted with the WDV of the respective block of the asset.

  1. Adjustment of carried forward losses if the assessee has opted for Section 115BAC or 115BAD [ITR 3 & 5]

Assessee opting for an alternative tax regime of Section 115BAC or Section 115BAD has to forego various exemptions and deductions. Further, carried forward losses attributable to such exemptions and deductions are not allowed to be set off. These losses are deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year.

ITR Forms notified for Assessment Year 2021-2022 have been amended to require the adjustment of such losses which are not allowed to be carried forward and set off.

  1. Deletion of Schedule DI [ITR 1 to 6]

Since the benefit of such extension was available for the Assessment Year 2020-2021 only, ITR forms for the Assessment Year 2021-2022 have been removed from the Schedule DI. Another consequential amendment has also been made to remove reference to Schedule DI.

  1. Exercise of option prescribed under section 115BAC [ITR 1 to 4]

The Finance Act, 2020, has inserted a new Section 115BAC to provide a special tax regime (also known as ‘alternate tax regime’) for Individuals or HUF wherein they have an option to pay taxes at concessional rates subject to fulfillment of certain conditions.

In Part-A (General Information) the assessee is required to choose whether he is opting for the alternative tax regime of Sections 115BAC or not.

Further, an assessee having income from business or profession is required to exercise such option on or before the due date for furnishing the returns of income by filing Form 10-IE. Thus, such assessee is required to mention the date of filing of Form 10-IE and Acknowledgement the number in case he has chosen the alternate regime of Section 115BAC.

  1. Clause-wise disclosure in respect of interest taxable under Section 115A read with Section 194LC [ITR 2, 3, 5, 6 & 7]

The Finance Act, 2020 has amended Section 194LC to provide for deduction of tax shall be done at 5% except in case the interest is payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee-denominated bond, TDS is required to be deducted at the rate of 4%, subject to fulfillment of certain conditions.

Since two different rates have been prescribed under Section 194LC (4% and 5%), ITR forms have been amended to require separate disclosure in respect of the income taxable at the rate of 4% and 5%.

  1. Increase in safe harbor limit prescribed under Section 50C [ITR 2, 3, 5 & 6]

Up to Assessment Year 2020-2021, this provision was not applicable if the value adopted for the payment of stamp duty was up to 105% of the consideration received. The Finance Act, 2020, has increased such a tolerable limit from 105% to 110% from Assessment Year 2021-2022. Consequential changes have been made to ITR-2, 3, 5, and 6.

  1. Exercise of option prescribed under section 115BAD [ITR 5]

. The Co-operative society has to exercise this option on or before the due date for furnishing the returns of income by filing Form 10-IF.

In Part-A (General Information) a cooperative society is required to choose if it is opting for the alternative tax regime of Sections 115BAD. Further, it is required to mention the date of filing of Form 10-IF and Acknowledgement number if it is exercising the option of Section 115BAD.

  1. Date of cash donation in case of deduction under Section 80GGA [ITR 2, 5 & 6]

Section 80GGA provides a deduction for the donations made by an assessee who is not earning income under the head ‘profits and gains of business or profession’. No deduction is allowed for the cash donation over Rs. 2,000.

ITR-2, 5, and 6 contain a Schedule 80GGA which requires separate reporting of the donation made in cash and donation made through other modes. The ITR forms notified for Assessment year 2021-2022 require additional disclosures of the date on which such cash donation has been made.

  1. No separate reporting of income from life insurance business [ITR 5 & 6]

The ITR forms notified for Assessment Year 2021-2022 have removed separate reporting requirements in respect of income from the life insurance business in Schedule BP.

  1. Nature of security to be furnished in Schedule 112A and Schedule 115AD [ITR 2, 3, 5, 6]

The ITR forms notified for the Assessment year 2021-2022 have inserted one new column in both the schedules requiring the assessee to provide the nature of the securities transferred (shares or units).

  1. Computation of cost of acquisition for Section 112A and 115AD [ITR 2, 3, 5, 6]

The relevant schedules in the ITR forms notified for Assessment year 2021-2022 have been modified to enable the assessee to put information regarding the sale price, FMV, and the cost of acquisition of the security and ascertain the gains appropriately.

  1. Ceiling to claim deduction under section 54EC specifically provided [ITR 5]

All the ITR Forms (except ITR 5) contained the ceiling for deduction under this section. The ITR-5 for the Assessment year 2021-22 also provides that deduction under section 54EC shall not exceed Rs. 50 lakhs.

  1. Nature of business code to be mentioned if assessees are claiming deduction under Section 80P [ITR 5]

Schedule 80P of the ITR requires the assessee to furnish various information relating to income and the amount of deduction. ITR form for the assessment year 2021-22 has inserted one more column in the Schedule 80P. This column requires the assessee to provide the nature of the business code in front of various types of income of such person.

  1. Additional question for ensuring the compliance under Section 92E [ITR 3, 5, 6]

Additional questions have been inserted in Part-A (General Information) to ensure that the assessee has complied with the requirements to obtain a Transfer Pricing report under Section 92E.

  1. Reference of distribution of accumulated loss by Investment fund has been removed [ITR 5 & 6]

Adjustment of such accumulated losses was allowed to be made in the Assessment Year 2020-2021 only, the ITR forms for Assessment Year 2021-2022 have removed the reference for adjustment of such losses.

  1. No need to bifurcate carried forward losses into Pass-through losses and Normal losses [ITR 2, 3, 5 & 6]

Losses carried forward by an assessee have the same treatment under the Income-tax Act even if they are in nature of pass-through losses. Old ITR forms bifurcated the losses under the head House property and Capital gains in Schedule CFL between pass-through losses and Normal losses. However, ITR utilities issued by the department do not require any such bifurcation. To bring the ITR forms in line with the ITR utilities issued by the department, ITR forms notified for the assessment year 2021-2022 have removed such bifurcation, and now a consolidated figure of such losses is to be disclosed.

Jul 142021
 

Most of the new ITR forms changes are consequential to the amendments made by the Finance Act, 2020 to the Income-tax Act. We have scrutinized the new ITR Forms and have identified the key changes in the new ITR 2 form viz-a-viz last year’s ITR Form. These changes have been explained below.

  1. Reporting of the amount deferred in respect of ESOPs [ITR 2 & 3]

If an employee has received ESOPs from an eligible start-up referred to in Section 80-IAC in respect of which the tax has been deferred, the Part B of Schedule TTI (Computation of tax liability on total income) seeks the disclosure of the tax amount which has been deferred in this respect.

  1. No option to carry forward TDS deducted under Section 194N [ITRs 2 to 7]

In case of tax deducted under Section 194N, credit for tax deducted shall be allowed in the assessment year relevant to the previous year in which such tax has been deducted. The corresponding amendment has been made in ITR-2 to ITR-7 to restrict the carry forward of TDS deducted under Section 194N.

  1. Consequential changes due to change in taxability of dividend Income [ITRs 1 to 7]

The Finance Act, 2020 reverts to taxation of dividends in the hands of the recipient shareholders instead of payment of dividend distribution tax (DDT) on the declaration, distribution, or payment of dividends by the domestic company. The new ITR forms notified for the Assessment Year 2021-22 have been amended to incorporate these changes.

3.1. Schedule OS (other sources)

Dividend income earned by a person is taxable as ‘income from other sources’ under section 56(2)(i). Up to the Assessment Year 2020-21, Schedule OS required disclosure of that dividend income only which is not exempt in hands of the taxpayer. In the new ITR forms, Schedule OS has been amended to include disclosure of all dividend income earned by the taxpayers.

(a) Deduction of expenses from dividend income
A new row has been inserted in Schedule OS to allow deduction of interest expenses. However, the deduction is available only if the dividend income is offered to tax in Schedule OS.
(b) Dividend income chargeable to tax at a special rate
The Finance Act, 2020, has abolished the DDT. Consequently, provisions of section 115BBDA are not applicable on dividends distributed, declared, or paid by companies on or after 01-04-2020. Thus, reference of section 115BBDA has been removed from Schedule OS in the new ITR forms
(c) Dividend Income of non-resident unitholders

A new row has been inserted under the column ‘any other income chargeable at special rate’ of Schedule OS to seek details of dividend income taxable in the hands of the unitholders of the Business trust.

3.2. Schedule SI (Special Income)

Schedule SI contains a list of incomes that are chargeable to tax at a special rate (long-term capital gains, winning from lotteries, games, etc.). Since Section 115BBDA has become redundant, corresponding changes have been made to Schedule SI.

3.3. Schedule EI (Exempt Income)

Now the entire dividend income is taxable in the hands of the shareholders, hence the reference of ‘Dividend income from domestic company (amount not exceeding Rs. 10 lakh)’ has been removed from Schedule EI.

3.4. Schedule PTI (Pass-through Income)

‘Schedule PTI’ seeks details of Pass-through Income from business trust or investment fund as per Section 115UA and Section 115UB.

  1. Effect of marginal relief to be highlighted in the ITR [ITR 2, 3, 5]

Marginal relief is allowed when taxable income is beyond the threshold limit after which surcharge is payable, but the net income over the threshold limit is less than the amount of surcharge.

Computation of marginal relief

Particulars Amount
♦ Tax on actual total income [A] Xxx
♦ Tax on deemed total income [B] Xxx
The difference in tax [C] Xxx
♦ Actual total income [D] Xxx
♦ Deemed total income [E] Xxx
The difference in income [F] Xxx
Marginal Relief (if C is more than F) xxx

Now, the ITR Forms for the Assessment year 2021-22 have been amended to specifically require the assessee to show the effect of marginal relief on the tax payable by disclosing “surcharge computed before marginal relief” and “surcharge computed after marginal relief” separately.

  1. Deletion of Schedule DI [ITR 1 to 6]

Since the benefit of such extension was available for the Assessment Year 2020-2021 only, ITR forms for the Assessment Year 2021-2022 has removed the Schedule DI. Other consequential amendment has also been made to remove reference of Schedule DI.

  1. Exercise of option prescribed under section 115BAC [ITR 1 to 4]

The Finance Act, 2020, has inserted a new Section 115BAC to provide a special tax regime (also known as ‘alternate tax regime’) for Individuals or HUF wherein they have an option to pay taxes at concessional rates subject to fulfillment of certain conditions.

In Part-A (General Information) the assessee is required to choose whether he is opting for the alternative tax regime of Sections 115BAC or not.

Further, an assessee having income from business or profession, is required to exercise such option on or before the due date for furnishing the returns of income by filing Form 10-IE. Thus, such assessee is required to mention the date of filing of Form 10-IE and Acknowledgement the number in case he has chosen the alternate regime of Section 115BAC.

  1. Clause-wise disclosure in respect of interest taxable under Section 115A read with Section 194LC [ITR 2, 3, 5, 6 & 7]

The Finance Act, 2020 has amended Section 194LC to provide for deduction of tax shall be done at 5% except in case the interest is payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee-denominated bond, TDS is required to be deducted at the rate of 4%, subject to fulfillment of certain conditions.

Since two different rates have been prescribed under Section 194LC (4% and 5%), ITR forms have been amended to require separate disclosure in respect of the income taxable at the rate of 4% and 5%.

  1. Increase in safe harbour limit prescribed under Section 50C [ITR 2, 3, 5 & 6]

Upto Assessment Year 2020-2021, this provision was not applicable if the value adopted for the payment of stamp duty was upto 105% of the consideration received. The Finance Act, 2020, has increased such a tolerable limit from 105% to 110% from Assessment Year 2021-2022. Consequential changes have been made to ITR-2, 3, 5, and 6.

  1. Date of cash donation in case of deduction under Section 80GGA [ITR 2, 5 & 6]

Section 80GGA provides a deduction for the donations made by an assessee who is not earning income under the head ‘profits and gains of business or profession’. No deduction is allowed for the cash donation in excess of Rs. 2,000.

ITR-2, 5 and 6 contain a Schedule 80GGA which requires separate reporting of the donation made in cash and donation made through other modes. The ITR forms notified for Assessment year 2021-2022 requires additional disclosures of the date on which such cash donation has been made.

  1. Nature of security to be furnished in Schedule 112A and Schedule 115AD [ITR 2, 3, 5, 6]

The ITR forms notified for the Assessment year 2021-2022 have inserted one new column in both the schedules requiring the assessee to provide the nature of the securities transferred (shares or units).

  1. Computation of cost of acquisition for Section 112A and 115AD [ITR 2, 3, 5, 6]

The relevant schedules in the ITR forms notified for Assessment year 2021-2022 have been modified to enable the assessee to put information regarding the sale price, FMV, and the cost of acquisition of the security and ascertain the gains appropriately.

  1. No need to bifurcate carried forward losses into Pass-through losses and Normal losses [ITR 2, 3, 5 & 6]

Losses carried forward by an assessee have the same treatment under the Income-tax Act even if they are in nature of pass-through losses. Old ITR forms bifurcated the losses under the head House property and Capital gains in Schedule CFL between pass-through losses and Normal losses. However, ITR utilities issued by the department does not require any such bifurcation. To bring the ITR forms in line with the ITR utilities issued by department, ITR forms notified for the assessment year 2021-2022 have removed such bifurcation, and now a consolidated figure of such losses is to be disclosed.

Jul 122021
 

Most of the new ITR forms changes are consequential to the amendments made by the Finance Act, 2020 to the Income-tax Act. We have scrutinized the new ITR Forms and have identified the key changes in new ITR forms viz-a-viz last year’s ITR Forms. These changes have been explained below.

  1. Reporting of the amount deferred in respect of ESOPs [ITR 2 & 3]

If an employee has received ESOPs from an eligible start-up referred to in Section 80-IAC in respect of which the tax has been deferred, the Part B of Schedule TTI (Computation of tax liability on total income) seeks the disclosure of the tax amount which has been deferred in this respect.

  1. Consequential changes due to change in taxability of dividend Income [ITRs 1 to 7]

The Finance Act, 2020 reverts to taxation of dividends in the hands of the recipient shareholders instead of payment of dividend distribution tax (DDT) on the declaration, distribution, or payment of dividends by the domestic company. The new ITR forms notified for the Assessment Year 2021-22 have been amended to incorporate these changes.

2.1. Schedule OS (other sources)

Dividend income earned by a person is taxable as ‘income from other sources’ under section 56(2)(i). Up to the Assessment Year 2020-21, Schedule OS required disclosure of that dividend income only which is not exempt in hands of the taxpayer. In the new ITR forms, Schedule OS has been amended to include disclosure of all dividend income earned by the taxpayers.

(a) Deduction of expenses from dividend income
A new row has been inserted in Schedule OS to allow deduction of interest expenses. However, the deduction is available only if the dividend income is offered to tax in Schedule OS.
(b) Dividend income chargeable to tax at a special rate
The Finance Act, 2020, has abolished the DDT. Consequently, provisions of section 115BBDA are not applicable on dividends distributed, declared, or paid by companies on or after 01-04-2020. Thus, reference of section 115BBDA has been removed from Schedule OS in the new ITR forms
(c) Dividend Income of non-resident unitholders

A new row has been inserted under the column ‘any other income chargeable at special rate’ of Schedule OS to seek details of dividend income taxable in the hands of the unitholders of the Business trust.

2.2. Schedule SI (Special Income)

Schedule SI contains a list of incomes that are chargeable to tax at a special rate (long-term capital gains, winning from lotteries, games, etc.). Since Section 115BBDA has become redundant, corresponding changes have been made to Schedule SI.

2.3. Schedule EI (Exempt Income)

Now the entire dividend income is taxable in the hands of the shareholders, hence the reference of ‘Dividend income from the domestic company (amount not exceeding Rs. 10 lakh)’ has been removed from Schedule EI.

2.4. Schedule PTI (Pass-through Income)

‘Schedule PTI’ seeks details of Pass-through Income from business trust or investment fund as per Section 115UA and Section 115UB.

  1. Effect of marginal relief to be highlighted in the ITR [ITR 2, 3, 5]

Marginal relief is allowed when taxable income is beyond the threshold limit after which surcharge is payable, but the net income over the threshold limit is less than the amount of surcharge.

Computation of marginal relief

Particulars Amount
♦ Tax on actual total income [A] xxx
♦ Tax on deemed total income [B] xxx
The difference in tax [C] xxx
♦ Actual total income [D] xxx
♦ Deemed total income [E] xxx
The difference in income [F] xxx
Marginal Relief (if C is more than F) xxx

Now, the ITR Forms for the Assessment year 2021-22 have been amended to specifically require the assessee to show the effect of marginal relief on the tax payable by disclosing “surcharge computed before marginal relief” and “surcharge computed after marginal relief” separately.

  1. Increase in threshold limit for tax audit [ITR 3 & 6]

Previous year ITR forms required the assessee to furnish whether during the year total sales/ turnover/ gross receipts of business exceeds Rs. 1 crore but does not exceed Rs. 5 crores. Necessary amendments have been brought in the ITR forms as notified for the assessment year 2021-22 to enhance the limit.

  1. Adjustment of unabsorbed depreciation if the assessee has opted for Section 115BAC or 115BAD [ITR 3 & 5]

The ITR forms notified for Assessment Year 2021-2022 has amended Schedule DPM (Depreciation on Plant and Machinery) to make such one-time adjustment to the WDV of the respective block of the asset. Further, Schedule UD [Unabsorbed Depreciation and allowance under Section 35(4)] has also been amended to make the corresponding adjustment to the unabsorbed depreciation for the amount of depreciation already adjusted with the WDV of the respective block of the asset.

  1. Adjustment of carried forward losses if the assessee has opted for Section 115BAC or 115BAD [ITR 3 & 5]

Assessee opting for an alternative tax regime of Section 115BAC or Section 115BAD has to forego various exemptions and deductions. Further, carried forward losses attributable to such exemptions and deductions are not allowed to be set off. These losses are deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year.

ITR Forms notified for Assessment Year 2021-2022 have been amended to require the adjustment of such losses which are not allowed to be carried forward and set off.

  1. Exercise of option prescribed under section 115BAC [ITR 1 to 4]

The Finance Act, 2020, has inserted a new Section 115BAC to provide a special tax regime (also known as ‘alternate tax regime’) for Individuals or HUF wherein they have an option to pay taxes at concessional rates subject to fulfillment of certain conditions.

In Part-A (General Information) the assessee is required to choose whether he is opting for the alternative tax regime of Sections 115BAC or not.

Further, an assessee having income from business or profession is required to exercise such option on or before the due date for furnishing the returns of income by filing Form 10-IE. Thus, such assessee is required to mention the date of filing of Form 10-IE and Acknowledgement the number in case he has chosen the alternate regime of Section 115BAC.

  1. Clause-wise disclosure in respect of interest taxable under Section 115A read with Section 194LC [ITR 2, 3, 5, 6 & 7]

The Finance Act, 2020 has amended Section 194LC to provide for deduction of tax shall be done at 5% except in case the interest is payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee-denominated bond, TDS is required to be deducted at the rate of 4%, subject to fulfillment of certain conditions.

Since two different rates have been prescribed under Section 194LC (4% and 5%), ITR forms have been amended to require separate disclosure in respect of the income taxable at the rate of 4% and 5%.

  1. Increase in safe harbor limit prescribed under Section 50C [ITR 2, 3, 5 & 6]

Up to Assessment Year 2020-2021, this provision was not applicable if the value adopted for the payment of stamp duty was up to 105% of the consideration received. The Finance Act, 2020, has increased such a tolerable limit from 105% to 110% from Assessment Year 2021-2022. Consequential changes have been made to ITR-2, 3, 5, and 6.

  1. Reference of Form 16D has been inserted in Schedule of Tax payments [ITR 3 to 7]

ITR forms require details of tax deducted at source as per the certificate issued by the Deductor. The ITR Forms for Assessment Year 2021-2022 have included a reference to Form 16D.

  1. Undertakings not eligible for deductions removed from Schedule Section 80-IB [ITR 3, 5, 6]

Schedule 80-IB has been amended to remove appropriate rows allowing deduction under the above obsolete sub-sections.

  1. Nature of security to be furnished in Schedule 112A and Schedule 115AD [ITR 2, 3, 5, 6]

The ITR forms notified for the Assessment year 2021-2022 have inserted one new column in both the schedules requiring the assessee to provide the nature of the securities transferred (shares or units).

  1. Computation of cost of acquisition for Section 112A and 115AD [ITR 2, 3, 5, 6]

The relevant schedules in the ITR forms notified for Assessment year 2021-2022 have been modified to enable the assessee to put information regarding the sale price, FMV, and the cost of acquisition of the security and ascertain the gains appropriately.

  1. Schedule 5A requires the assessee to furnish the tax audit requirement of the spouse under sections 44AB or 92E [ITR 3]

Finance Act, 2021 has extended the due date to file a return of income in case of a person, who is a partner of a firm who is required to obtain a Transfer Pricing report under Section 92E, to 30th November of the assessment year.

Finance Act, 2021, has amended the due date for filing of return of income in case of spouse of a person, being a partner in a firm whose accounts are required to be audited or who is required to furnish a Transfer pricing report under Section 92E, if such spouse is governed by the provisions of Section 5A.

Schedule 5A requires the assessee to furnish information regarding apportionment of income between spouses governed by the Portuguese Civil Code. Various details regarding the spouse in such cases are captured in the ITR such as the Name and PAN of the spouse, income under various heads of income.

In order to ensure that such spouse has furnished return of income by the applicable due date, the consequential changes have been made in ITR -3 notified for the Assessment year 2021-22 to seek the due dates applicable in case of a spouse.

  1. Additional question for ensuring the compliance under Section 92E [ITR 3, 5, 6]

Additional questions have been inserted in Part-A (General Information) to ensure that the assessee has complied with the requirements to obtain a Transfer Pricing report under Section 92E.

  1. STCG other than those covered under section 111A can’t be shown in Schedule PTI [ITR 3]

Short-term capital gains other than those covered under section 111A cannot be disclosed in Schedule PTI.

  1. No need to bifurcate carried forward losses into Pass-through losses and Normal losses [ITR 2, 3, 5 & 6]

Losses carried forward by an assessee have the same treatment under the Income-tax Act even if they are in nature of pass-through losses. Old ITR forms bifurcated the losses under the head House property and Capital gains in Schedule CFL between pass-through losses and Normal losses. However, ITR utilities issued by the department do not require any such bifurcation. To bring the ITR forms in line with the ITR utilities issued by the department, ITR forms notified for the assessment year 2021-2022 have removed such bifurcation, and now a consolidated figure of such losses is to be disclosed.

Jul 102021
 

ITR – 1 and ITR – 4 cannot be filed in case of deferment of tax on ESOPs

The Finance Act, 2020, has allowed deferring the payment or deduction of tax on ESOPs allotted by an eligible start-up referred under Section 80-IAC. The tax is required to be paid or deducted in respect of such ESOPs within 14 days from the earliest of the following period:

(a) After expiry of 48 months from the end of assessment year relevant to the financial year in which ESOPs are allotted;
(b) From the date the assessee ceases to be an employee of the organization; or
(c) From the date of sale of shares allotted under ESOP.

Consequently, Rule 12 has been amended to provide that an assessee in whose case payment or deduction of tax in respect of such ESOPs has been deferred shall not be eligible to furnish his return of income in ITR-1 and ITR-4. Corresponding changes have been made to ITR-1 and ITR-4.

Reporting of the amount deferred in respect of ESOPs in ITR 2 & ITR 3

If an employee has received ESOPs from an eligible start-up referred to in Section 80-IAC in respect of which the tax has been deferred, the Part B of Schedule TTI (Computation of tax liability on total income) seeks the disclosure of the tax amount which has been deferred in this respect.

The ITR Form does not provide any guidance on the computation of the tax to be deferred. In such a situation, the tax to be deferred can be computed in accordance with the guidance give below.

  1. The applicable rate of tax

As the perquisite arising from ESOPs shall be taxable in the year in which shares are allotted or transferred by the employer to employees, the tax shall be calculated on the basis of rates applicable in the year in which shares are allotted or transferred.

2 How to calculate the amount of tax to be deferred?

An employee is required to disclose the value of perquisite from ESOPs in his return of income (Schedule TTI) of the year in which shares are allotted. However, due to the deferment of payment of tax, the employee shall not be required to pay tax on perquisite arising from ESOPs in such year. The tax to be payable on the salary income, excluding the perquisite value of ESOPs, should be computed as per the following formula.

Tax payable on salary income excluding ESOPs perquisite = Tax on total income including ESOPs perquisites X Total income excluding ESOPs perquisites
Total income including ESOPs perquisites

Case 2 –  Mr. A, working in a start-up company, has been allotted 100,000 shares at the rate of Rs. 10 per share under the ESOP scheme in the Financial Year 2020-21. The fair market value of shares at the time of exercising of option by Mr. A is Rs. 100. The perquisite value of ESOPs taxable in the hands of Mr. A shall be Rs. 90 Lakhs [100,000 shares* (Rs. 100 – Rs. 10)].

The annual salary of Mr. A (excluding perquisite value of ESOPs) in that year is Rs. 40 Lakhs. He continues with the company even after the expiry of 48 months from the end of the assessment year in which shares are allotted and he does not sell the shares even after the expiry of said period. What shall be the mechanism for deferment of TDS and tax on the perquisite value of ESOPs in such a case?

(a) Assessment Year 2021-22

Mr. A would be required to disclose the perquisite value of ESOPs, i.e., Rs. 90 lakh in his return of income. The tax to be payable on the salary income, excluding the perquisite value of ESOPs, shall be computed in the following manner:

Particulars Amount (in Rs.)
Total Income before including perquisite value of ESOPs (A) 40,00,000
Add: Perquisite Value of ESOPs (B) 90,00,000
Total Income after including perquisite value of ESOPs (C) 1,30,00,000
Tax on Rs. 1.30 crores as per slab rates applicable for Assessment Year 2021-22 as per old taxation regime (D) 37,12,500
Add: Surcharge [E = D * 15%] 5,56,875
Add: Education Cess [F = (D + E) * 4%] 1,70,775
Total tax liability for Assessment Year 2021-22 after considering perquisite value of ESOPs [G = D + E + F] 44,40,150
Tax liability attributable to salary income (excluding the prerequisite of ESOPs) [G * A / C] 13,66,200

(b) Assessment Year 2026-27

As Mr. A continues with the company after the expiry of 48 months from the end of the Assessment Year in which shares are allotted and he does not sell the shares even after expiry of said period, the liability to deduct tax or make payment of tax on perquisite value of ESOP will arise in the Assessment Year 2026-27, i.e., after the expiry of 48 months from the end of the Assessment year (2021-22) in which shares are allotted. The TDS shall be deducted within 14 days from the end of the assessment year 2025-26. The tax liability for the Assessment Year 2026-27 shall be computed as under:

Particulars Amount (in Rs.)
Total tax liability for Assessment Year 2021-22 after considering perquisite value of ESOPs 44,40,150
Less: Tax already paid at the time of filing of return for the Assessment Year 2021-22 13,66,200
Differential amount to be deducted or paid by the employer or employee in the Assessment Year 2026-27 30,73,950

 

Jul 082021
 

The CBDT has amended Rule 2B to provide an exemption in respect of cash allowance received in lieu of leave travel concession (LTC).

Due to the COVID-19 pandemic and the nationwide lockdown, employees who had not been able to avail of LTC in the block of 2018-21 were allowed to claim the exemption in respect of cash allowance subject to fulfillment of certain conditions.

Amendment effective from – from the 1st day of April 2021, i. e., and amendment will be applicable for the incomes earned in the financial year 2020-2021.

Amendment:

For the assessment year beginning on the 1st day of April 2021, where the individual referred to in sub-rule (1) avails any cash allowance from his employer in lieu of any travel concession or assistance,

The amount exempted under the second proviso to clause (5) of section 10 shall be the amount,

  • not exceeding thirty-six thousand rupees per person, for the individual and the member of his family, or
  • one-third of the specified expenditure,

whichever is less,

subject to fulfillment of the following conditions, namely:-

 

Conditions:

  • the individual has exercised an option to avail exemption under the second proviso of clause (5) of section 10, in lieu of the exemption under clause (5) of section 10 in respect of one unutilized journey
    • during the block of four calendar years commencing from the calendar year 2018; (i.e. 1st January 2018 to 31st Dec 2021)

 

  • the payment in respect of the specified expenditure is made by the individual or any member of his family to a registered person during the specified period; i. e., from the 12thday of  October 2020  and ending on the 31stday of March 2021.

 

  • the payment in respect of the specified expenditure is made by an account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA; and

 

  • the individual obtains a tax invoice in respect of specified expenditure from the registered person referred to in clause (ii).

 

Expenditure for which exemption is allowed u/s 10(5):

specified expenditure: means  expenditure  incurred  by  an  individual  or  a  member  of  his  family:

  1. during a specified period, i. e., from the 12th day of  October 2020  and ending on the 31st day of March 2021.
  2. on goods or services, which are liable to tax at an aggregate rate of twelve percent. or above under various Goods and Services Tax (GST) laws and
  3. goods are purchased or services procured from GST registered vendors or service providers

 

Impact of above amendment: Now the employees availing LTC have to exercise two options as below:

  • Whether individual employee opts to avail benefit under alternative tax regime. If an individual opts for the alternative tax regime under section 115BAC, exemption pertaining to LTC is not available to him at all. This option shall be chosen at the time of filing of the return.
  • Now employees have to choose between, to claim LTC in section 10(5) or under 2nd proviso to section 10(5). Under section 10(5) expenditure shall be exempted based on expenses incurred by the shortest distance method or under the 2nd proviso, the expenditure shall be exempted based on actual expenditure incurred multiply by a member in family traveled. This option must be selected up to 31st Dec 2021 for the expenditure incurred up to 31st Mar 2021. 

Thus, the net impact of this amendment is an individual employee for assessing income for FY 2020-21 can take benefit of travel made up to 31st March 2021 instead of expenditure incurred up to 31st Dec 2020.

Jul 062021
 

The Central Board of Direct Taxes (CBDT) has notified Income Tax Return (ITR) Forms for the Assessment Year 2021-22 vide Notification No. 21/2021, dated 31-03-2021. Considering the crisis due to the COVID pandemic, the board has not changed the ITR forms significantly.

Nature of income ITR 1* ITR 2 ITR 3 ITR 4*

Salary Income

Income from salary/pension (for ordinarily resident person)
Income from salary/pension (for not ordinarily resident and non-resident person)
Any individual who is a Director in any company
If payment of tax in respect of ESOPs allotted by an eligible start-up has been deferred

Income from House Property

Income or loss from one house property (excluding brought forward losses and losses to be carried forward)
An individual has brought forward loss or losses to be carried forward under the head of House Property
Income or loss from more than one house property
Income from Business or Profession
Income from business or profession
Income from presumptive business or profession covered under section 44AD, 44ADA, and 44AE (for a person resident in India)
Income from presumptive business or profession covered under section 44AD, 44ADA, and 44AE (for not ordinarily resident and non-resident person)
Interest, salary, bonus, commission, or share of profit received by a partner from a partnership firm

Capital Gains

The taxpayer has held unlisted equity shares at any time during the previous year
Capital gains/loss on sale of investments/property

Income from Other Sources

Family Pension (for ordinarily resident person)
Family Pension (for not ordinarily resident and non-resident person)
Income from other sources (other than income chargeable to tax at special rates including winnings from lottery and racehorses or losses under this head)
Income from other sources (including income chargeable to tax at special rates including winnings from lottery and racehorses or losses under this head)
Dividend income exceeding Rs. 10 lakhs taxable under Section 115BBDA
Unexplained income (i.e., cash credit, unexplained investment, etc.) taxable at 60% under Section 115BBE
A person claiming deduction under Section 57 from income taxable under the head ‘Other Sources’ (other than deduction allowed from the family pension)

Deductions

A person claiming deduction under Section 80QQB or 80RRB in respect of royalty from patent or books
A person claiming deduction under section 10AA or Part-C of Chapter VI-A

Total Income

Agricultural income exceeding Rs. 5,000
Total income exceeding Rs. 50 lakhs
The assessee has any brought forward losses or losses to be carried forward under any head of income

Computation of Tax liability

If an individual is taxable in respect of an income but TDS in respect of such income has been deducted in hands of any other person (i.e., clubbing of income, Portuguese Civil Code, etc.)
Claiming relief of tax under sections 90, 90A or 91

Others

Assessee has:

Income from foreign sources

Foreign Assets including financial interest in any foreign entity

Signing authority in any account outside India

Income has to be apportioned in accordance with Section 5A
If the tax has been deducted on cash withdrawal under Section 194N
* ITR-1 can be filed by an Individual only who is ordinarily resident in India. ITR-4 can be filed only by an Individual or HUF who is ordinarily resident in India and by a firm (other than LLP) resident in India.
 

Other Assessees

Status of Assessee ITR 4 ITR 5 ITR 6 ITR 7
Firm (excluding LLPs) opting for presumptive taxation scheme of section 44AD, 44ADA or 44AE
Firm (including LLPs)
Association of Persons (AOPs)
Body of Individuals (BOI)
Local Authority
Artificial Juridical Person
Companies other than companies claiming exemption under Section 11
Persons including companies required to furnish return under:

Section 139(4A);

Section 139(4B);

Section 139(4C);

Section 139(4D);

Business Trust
Investment Fund as referred to in Section 115UB
Jul 032021
 

Most of the new ITR form changes are consequential to the amendments made by the Finance Act, 2020 to the Income-tax Act. Further, the ITR-1 shall not be available to a taxpayer in whose case the tax has been deducted on cash withdrawal under Section 194N. Further, return filing is also not allowed in ITR-1 or ITR-4 if the tax has been deferred in respect of ESOPs allotted by an eligible start-up.

We have scrutinized the new ITR Forms and have identified the key changes in new ITR forms viz-a-viz last year’s ITR Forms. These changes have been explained below.

  1. ITR – 1 and ITR – 4 cannot be filed in case of deferment of tax on ESOPs [ITR 1 & 4]

Rule 12 has been amended to provide that an assessee in whose case payment or deduction of tax in respect of such ESOPs has been deferred shall not be eligible to furnish his return of income in ITR-1 and ITR-4. Corresponding changes have been made to ITR-1 and ITR-4.

  1. ITR – 1 cannot be filed in case tax has been deducted under Section 194N [ITR 1]

Tax under this provision is required to be deducted if the amount of cash withdrawn during the year exceeds Rs. 20 lakhs in case of certain non-filers of return and Rs. 1 crore in other cases.

Rule 12 of the Income-tax Rules have been amended to restrict an assessee, in whose case tax has been deducted under this provision, from furnishing return of income in ITR–1. Consequential changes have been made to ITR-1.

  1. Consequential changes due to change in taxability of dividend Income [ITRs 1 to 7]

The Finance Act, 2020 reverts to taxation of dividends in the hands of the recipient shareholders instead of payment of dividend distribution tax (DDT) on the declaration, distribution, or payment of dividend by the domestic company. The new ITR forms notified for the Assessment Year 2021-22 have been amended to incorporate these changes.

3.1. Schedule OS (other sources)

Dividend income earned by a person is taxable as ‘income from other sources’ under section 56(2)(i). Up to the Assessment Year 2020-21, Schedule OS required disclosure of that dividend income only which is not exempt in hands of the taxpayer. In the new ITR forms, Schedule OS has been amended to include disclosure of all dividend income earned by the taxpayers.

(a) Deduction of expenses from dividend income
A new row has been inserted in Schedule OS to allow deduction of interest expenses. However, the deduction is available only if the dividend income is offered to tax in Schedule OS.
(b) Dividend income chargeable to tax at a special rate
The Finance Act, 2020, has abolished the DDT. Consequently, provisions of section 115BBDA are not applicable on dividends distributed, declared, or paid by companies on or after 01-04-2020. Thus, reference of section 115BBDA has been removed from Schedule OS in the new ITR forms
(c) Dividend Income of non-resident unitholders

A new row has been inserted under the column ‘any other income chargeable at special rate’ of Schedule OS to seek details of dividend income taxable in the hands of the unitholders of the Business trust.

3.2. Schedule SI (Special Income)

Schedule SI contains a list of incomes that are chargeable to tax at a special rate (long-term capital gains, winning from lotteries, games, etc.). Since Section 115BBDA has become redundant, corresponding changes have been made to Schedule SI.

3.3. Schedule EI (Exempt Income)

Now the entire dividend income is taxable in the hands of the shareholders, hence the reference of ‘Dividend income from the domestic company (amount not exceeding Rs. 10 lakh)’ has been removed from Schedule EI.

3.4. Schedule PTI (Pass-through Income)

‘Schedule PTI’ seeks details of Pass-through Income from business trust or investment fund as per Section 115UA and Section 115UB.

3.5. Quarterly breakup of dividend income under ITR-1

All ITR forms (except ITR-1) sought a quarter-wise breakup of dividend income earned by the taxpayer during the previous year. This break-up helps in computing interest leviable under section 234C for default in payment of advance tax liability. To provide similar relief to the taxpayer filing return in ITR-1, this form has been amended to allow taxpayers to provide a quarterly break-up of dividend income earned during the year.

3.6. Schedule DDT removed from ITR-6

Schedule DDT seeks details of distributed profits of domestic companies and payment of DDT. Since the payment of DDT has been abolished on any distributed profit on or after April 1, 2020, Schedule DDT has been removed from the new ITR-6 Form.

  1. Deletion of Schedule DI [ITR 1 to 6]

Since the benefit of Schedule DI extension was available for the Assessment Year 2020-2021 only, ITR forms for the Assessment Year 2021-2022 have removed from the Schedule DI. Another consequential amendment has also been made to remove reference to Schedule DI.

  1. Exercise of option prescribed under section 115BAC [ITR 1 to 4]

The Finance Act, 2020, has inserted a new Section 115BAC to provide a special tax regime (also known as ‘alternate tax regime’) for Individuals or HUF wherein they have an option to pay taxes at concessional rates subject to fulfillment of certain conditions.

In Part-A (General Information) the assessee is required to choose whether he is opting for the alternative tax regime of Sections 115BAC or not.

Further, an assessee having income from business or profession is required to exercise such option on or before the due date for furnishing the returns of income by filing Form 10-IE. Thus, such assessee is required to mention the date of filing of Form 10-IE and Acknowledgement the number in case he has chosen the alternate regime of Section 115BAC.

Jun 292021
 

The existing process for approving institutions u./s 80G

Section 80G allows a deduction for the donation made to certain funds and institutions. The deduction for such donation is allowed to the donor only if donee (receiving end) fund or institution is approved by the Principal Commissioner or Commissioner, and fulfills other conditions. Hitherto, the institution or fund had to be approved by the CIT in accordance with the rules made on this behalf. Such approval was valid for perpetuity till it was withdrawn/canceled.

Need of change in process

  1. Procedure relating to approval under section 80G is changed with effect from 01-06-2020,
  2. Due to the crisis caused by COVID-19, the CBDT announced to defer the implementation of the new procedure for registration under the aforesaid sections.
  3. Thus, the Amendment Act, 2020 deferred the date of enforcement of the new procedure to 01-04-2021.

Issues in new process:

  1. EXPENDITURE ON RELIGIOUS ACTIVITY

New Form 10A and 10AB have a category of charitable cum religious organization which settles the confusion of whether an organization can be both charitable as well as religious simultaneously.

The Forms separately require reporting of expenditure on religious activities which will be considered for eligibility of 80G approval.

Normally the religious trusts are not allowed to be approved under section 80G. However, Section 80G(5B) allows for a charitable organization to have a religious activity not exceeding 5% of the total income in that previous year.

The organizations having 80G approval and going for revalidation of this approval should ensure that they are complied with the provisions of section 80G(5B) before making such an application for revalidation.

 

  1. STATEMENT OF DONATION

With Finance Act, 2020 deduction on account of the donation under section 80G shall be allowed to the donor only on the basis of the statement filed by the donee trust or institution. Hence, if a statement is not filed, the donor will not get a deduction for the donation.

In case of delay in filing such a statement, a late fee of Rs. 200 per day shall be applicable under newly inserted Section 234G of the Income-tax Act.

Further, a penalty under Section 271K, which shall not be less than Rs. 10,000 and which may extend up to Rs. 1 lakh, shall be leviable if the trustor institution fails to file such statement or fails to issue a certificate of donation.

2.1. Due date of filing of Statement and Issuing Certificate

The newly inserted Rule 18AB provides that the statement in Form 10BD shall be filed on or before the 31st of May, immediately following the financial year in which the donation is received. The donee is also required to issue the certificate in Form 10BE which is also required to be issued on or before the 31st of May, immediately following the financial year in which the donation is received.

Hence, if the certificate in form number 10BE is to be generated and downloaded from the web portal then furnishing the certificate by 31st May as provided in the rule may create practical difficulty as a statement of donations is also required to be submitted by 31st May.

2.2. Filing of Correction Statement

One may need to wait for the relevant procedure to be laid down to submit the correction statement for correcting clerical errors such as wrong name, PAN, amount, etc.

2.3. Filing of NIL Statement of Donations

Rule 18AB doesn’t contain any provision to clarify whether a reporting entity is required to submit a nil statement of donation.

2.4. Accounting Challenge

Form 10BD provides that, while reporting the aggregate amount of donation received from any person donation type should be reported on the basis of nature of donation i.e. (Corpus, specific grant, others).

Hence NGOs need to adjust the present accounting framework to get the above information at year-end.

 

  1. DEDUCTION TO DONOR

The trusts or institutions which have been granted perpetuity of approval under section 80G are required to make an application again under the amended provision of section 80G within 3 months from the date on which the new provisions shall come into force i.e. application has to be filed on or before 30th June 2021.

Now, the question arises if an organization collects donations but does not apply for renewal or if the approval application is canceled.

Jun 272021
 

Based on PRESS RELEASE, DATED 1-5-2021

In view of the adverse circumstances arising due to the severe Covid-19 pandemic and also in view of the several requests received from taxpayers, tax consultants & other stakeholders from across the country, requesting that various compliance dates may be relaxed, the Government has extended certain timelines on 1st May 2021:

Action to be taken under the income tax act Existing deadline Revised deadline
Payment of tax deducted under section 194-IA, i.e., TDS on purchase of immovable property 30th April 2021 on or before 31st May 2021
Payment of tax deducted under section 194-IB, i.e., tax deducted at source on payment of rent 30th April 2021 on or before 31st May 2021
Payment of tax deducted under section 194-M – regarding tax deduction at source from any money paid by an individual or HUF to a resident contractor when the services are provided for personal use 30th April 2021 on or before 31st May 2021
Filing of challan-cum-statement for TDS deducted u/s 194-IA 30th April 2021 on or before 31st May 2021
Filing of challan-cum-statement for TDS deducted u/s 194-IB 30th April 2021 on or before 31st May 2021
Filing of challan-cum-statement for TDS deducted u/s 194-M 30th April 2021 on or before 31st May 2021
Statement in Form No. 61, containing particulars of declarations received in Form No. 60 on or before 30th April 2021 on or before 31st May 2021
Revised return for Assessment Year 2020-21 on or before 31st March 2021 on or before 31st May 2021
Belated return for Assessment Year 2020-21 on or before 31st March 2021 on or before 31st May 2021
Income-tax return in response to notice under section 148 1st April 2021 or thereafter Time allowed under that notice or by 31st May 2021, whichever is later
Appeal to Commissioner (Appeals) 1st April 2021 or thereafter Last date as provided under respective section or 31st May 2021, whichever is later
Objections to Dispute Resolution Panel (DRP) under section 144C 1st April 2021 or thereafter Last date as provided under respective section or 31st May 2021, whichever is later